Although requirements for a home equity line of credit, or HELOC, vary between lenders, most lenders require the homeowner to have two years of on-time mortgage payments, positive history of revolving credit payments and sufficient income to repay the loan. Some lenders require a minimum credit score of 680 from homeowners looking to take out home equity lines of credit. The homeowner must also have sufficient equity in the home.
When taking out a home equity line of credit, the homeowner’s home provides security for the loan, although lenders give preference to homeowners who own other valuable assets. Lenders see bank and investment accounts, retirement plans, vehicles and other major assets as a positive factor when determining eligibility for home equity lines of credit.
Homeowners must have a sufficient amount of equity in the home to receive a home equity line of credit. Lenders determine equity by subtracting the amount owned on the mortgage from the value of the home. For example, if a home appraises for $150,000 and the homeowner still owes $100,000 on the mortgage, the equity in the home is $50,000.
Homeowners must generally supply home equity lenders with proof of stable income through pay stubs and tax returns.